Political Parties Must Address Social Innovation

Leaders in the social innovation field want politicians to focus on the sector’s potential in their federal election campaigns, and not limit innovation to just technology.

In the lead up to the federal election, Prime Minister Malcolm Turnbull has heavily promoted his innovation agenda. On Wednesday he is expected to pledge $15 million for business start-ups, which will add to the $1.1 billion innovation fund.

Opposition leader Bill Shorten has also released an innovation policy, centered on start-up finance and a “smart investment” fund.

But while politicians often speak about creating an environment for innovation, the social side is left out, according to managing director of Social Outcomes Sandy Blackburn-Wright.

“The first thing I’d say is not to consider innovation to be solely fin-tech and med-tech/bio-tech. Social innovation can actually deliver a great deal to the economy,” Blackburn-Wright said.

“Broaden the definition and see social innovation as part of the innovation focus in the same way they’re looking to seed innovative projects in the fin-tech med-tech area… do exactly the same thing for social.

“They’re offering various platforms for innovation to happen – whether it’s grant funding, collaboration opportunities, procurement opportunities – I’d like to see the same courtesy, if you will, extended to the social entrepreneurs.”

She said that she was yet to hear political parties at a federal level refer to social innovation as part of the innovation narrative.

“I just don’t think they put two and two together, I don’t think they have an objection, I just think they align innovation with technology. And while I think that’s true – it’s more than that,” she said.

She said that it was in the government’s – and voters’ – interest to prioritise social innovation because it creates efficiency in the use of taxes and service delivery.

“We spend such a great deal on social service delivery, but we’re not seeing much change as a result, so it’s really about how public funds could be better utilised,” she said.

“The social innovation piece is saying start from the basics, go back to the evidence base and find out what we could do differently. It’s accountability around the public money, rather than just going through the motions as we have at the past.

“That’s not pointing fingers at the government, it’s really on both sides of the contracting equation – for the social sector and for government to almost call a truce and say, we may have funded this way in the past, but let’s get clear about what actually works and support that going forward, thereby better creating value for money out of taxpayers money.”  

Blackburn-Wright said there were a number of items on her federal election wishlist.

“One of the things that the federal government could do very simply, is to consider a legal structure whereby social enterprises sit in a class of their own so they could take on debt equity and philanthropy,” she said.

“If we’re going to scale social enterprise, and there are many reasons why we should, it would make life so much easier and the entry barriers would be removed if we had a legal structure that could do all three things.

“At the moment you have to chose, you could get grant funding and maybe when you get really strong some debt from the banks, or you have to be a private company and go down the equity route.

“In other countries [there are] legal structures that can straddle both those two as long as the impact is locked in to the constitution.That wouldn’t cost the government any money but it would enable social entrepreneurs to get up and running and access capital to grow much more easily.”  

Social Traders managing director David Brookes also said government has an important role to play in supporting social enterprises and social startups.

“Australia is lagging many other countries around the world in terms of recognising social enterprise as part of its broader economic and regional development policies,” Brookes said.

“In Australia we have seen a significant increase in social enterprise occurring, but social enterprise is certainly still not reaching its potential, and my view as to the reason why that is the case is that social enterprise is operating in a policy vacuum at a… federal level.

“My ask of all political parties – whether they’re blue, red, green or otherwise – is that they look to develop a clear social enterprise policy that recognises social enterprise as part of the economy, and the contribution it plays to communities throughout Australia.

“Government does have a role to raise the profile of social enterprise as a successful model that can be replicated and scaled.”  

He said government should financially support social startups through its procurement and funding policies.

“Also, my ask of government is to use their procurement policies and processes to incorporate social value, social impact, which provides greater overall economic value from their purchasing,” he said.

“Governments can already do this in their existing procurement policies, but it needs to be much clearer and much more deliberate. They need to be encouraging and promoting… social benefit suppliers into their supply chains and into their contracts, and they should be playing a leadership role in that area.

“The other area is that government should be providing seed funding and capital to start up and grow social enterprises.”

Brookes said that voters would connect with social innovation if they knew about its potential to create change.

“ What I think voters care about is addressing some of our chronic economic and social challenges, and I think voters probably wouldn’t necessarily engage with the social innovation terms as such, but I think they would engage with the objectives and outcomes that social innovation and social entrepreneurship can achieve,” he said.

“If social innovation is explained in a way that people can understand in terms of the impact it can create in addressing issues such as long-term unemployment, supporting access to services for disabled people, providing training and employment opportunities for young people who are finding it difficult to access jobs, then I think it’s certainly something that can and will resonate with voters.”

Blackburn-Wright, who also co-founded Impact Investing Australia and is a fellow at the Centre for Social Impact, said that federal politicians should also focus on impact investment.  

“The other thing that we are looking for is program-related investment, so a submission’s been made to the federal government to ask if when a philanthropist makes an investment into a social enterprise, and if it’s not paid back, it be converted to a grant in terms of tax rulings,” she said.

“Again other countries have this and we don’t, and it would really open up the philanthropic sector’s ability to support the growth of social enterprise is program-related investment regulations change to allow for that very simple tax ruling.”

She would also like politicians to support intermediary organisations, like Social Outcomes and Social Traders, who provide help to social startups  

“We’ve seen in other countries around the world how supporting the role of intermediaries and funding their work has really allowed the market to take off elsewhere and become much more self-sustaining. That seed capital and funding the role of intermediaries is really important,” she said.